3 Reasons Why Retiring in Texas Might Be Your Best Financial Move | Global News Avenue

Over the past few years, Texas has become not only a popular tourist destination and the center of major U.S. businesses, but also an ideal retirement destination. If you’re approaching that stage of your life, you may be wondering whether moving to Texas is a financially smart move for you.

Here’s what you need to know about living on a fixed income in Texas as a retiree.

The appeal of Texas retirement

From warm climate, diverse culture and beautiful environment to pension friendly statuswhich is why Texas is experiencing an influx of retirees. In fact, by 2022, Texas will be the fourth most popular state for net migration of people over 60, according to a study released in 2024.

Learn about some of the appealing aspects of the Lone Star State and why its affordable status might put it on your short list of retirement destinations.

1. Reduce the cost of living

cost of living Things can vary greatly in a large state like Texas, which is made up of large metropolitan areas (some of which are wealthier than others) as well as many suburbs and small towns. But overall, it’s fair to say that the cost of living in Texas is cheaper than many other states in the United States.

According to 2023 data from the Bureau of Economic Analysis, per capita personal consumption expenditures in Texas were $52,229, below the national average of $56,202. For comparison purposes, California is $64,835 and Florida is $60,204.

When you dig into specific locations in Texas, you can also find some of the most affordable places to live in the country. For example, in Kiplinger’s “America’s Cheapest Cities to Live in: U.S. Cities Edition” 2024 survey (based on government cost of living data), three Texas cities (Edinburgh, Harlingen and Amarillo) topped finished in the top five, while Macallan ranked lower. No. 14.

2. Below-average housing costs

Housing costs in Texas are also lower than the national average. The average home price in Texas in 2024 is $299,467, which is lower than the national average of $357,469. Renters can also find more affordable housing, as the average rent in Texas is $1,255 per month, which is lower than the national average of $1,560 (as of December 2024).

3. Preferential tax rate

Texas is one of only seven states that doesn’t impose a personal income tax, which is a big deal for people living on a retirement budget. No-income tax states like Texas are sometimes called “pension-friendly states” and tend to be popular with retirees. That’s because residents don’t pay any taxes on their pensions, Social Security benefits, or distributions from their IRAs or 401(k)s. This actually gives you a bigger budget.

Texas also has lower state and local sales taxes. The rate is 8.2%, ranking 14th in the country. By comparison, Oklahoma’s state and local sales tax rate is 8.989%, and Arkansas’ combined tax rate is 9.448%. Good news for retirees, too: In Texas, there is no sales tax on groceries, prescription drugs and over-the-counter medicines.

potential disadvantages

While there are many positive aspects to retiring in Texas, there are also some disadvantages to consider.

1. Natural disaster risk

The weather in Texas can vary greatly depending on which part of the state you live. But even more worrisome is the potential for Texas residents to face extreme weather events such as hurricanes, droughts and wildfires. From 1980 to 2023, the state’s cumulative losses from natural disasters exceeded $400 billion, the highest in the nation.

If you live in Texas, you may need to purchase additional insurance for your home. It’s also crucial to have a strong emergency fund if you need to pay out-of-pocket expenses or evacuate for a period of time.

2. Healthcare Cost and Quality

One area where Texas’ senior population is underserved is in its health care system. Texas ranks 38th in health in the 2024 America’s Health Rankings Advanced Report, based on social and economic factors, physical environment, behavior, clinical care and health outcomes.

However, in terms of coverage, Texas residents have both Medicare Advantage and Medicare Supplement plan options. Not every state offers both services, so that’s a plus. The average monthly Medicare Advantage plan premium in Texas in 2025 is $6.81, which is lower than the national monthly average of $17.97.

3. Transportation and accessibility challenges

As the second most populous state, Texas faces some transportation challenges because decades of highway and road upgrades have failed to keep up with the growth in the number of drivers. The state’s residents lose an average of 54 hours in traffic each year. Additionally, the Texas Health Advisory Council on Aging acknowledged that more needs to be done to meet the needs of people 65 and older who require public transportation services.

Likewise, transportation options may vary by location. Metropolitan areas tend to offer more public transportation, while some smaller suburbs are more walkable or have better bike lanes. Also worth exploring: whether an area has a volunteer driver program to help seniors get to and from appointments.

4. Higher property taxes

Although Texas is tax-friendly on income, its property taxes are higher than many areas. Texas ranks seventh in property taxes paid as a percentage of the value of owner-occupied homes at 1.47%.

bottom line

Texas’ no income tax policy alone may put the state on your retirement short list. It also has a lower average cost of living than many other places across the country, so if you’re coming from a higher-cost-of-living area like California or the Northeast, you may come out ahead financially.

That said, everything is bigger in Texas, including the number of choices you have in terms of where to live. Whether you choose to live in a city like Houston or Austin or in a small town like this, carefully compare lifestyle and cost of living fredericksburg.

To help you make your financial decisions, consider seeking advice from a financial advisor who can help you make informed decisions that fit your retirement financial situation.